Declared goods classification controls sales tax levy; cotton belting was treated as cotton fabric and taxed only under notified conditions.

Cotton belting was held to fall within the statutory description of "cotton fabrics" under section 14(iia) of the Central Sales Tax Act, 1956, because that description extends to fabrics manufactured wholly or partly from cotton. The State could not reclassify declared goods by describing them differently in a taxing notification, so the goods retained their declared-goods character. Levy of sales tax on such declared goods also required compliance with section 3-AA of the Uttar Pradesh Sales Tax Act, 1948, including a notified single point of sale and prescribed rate within the Central Act ceiling. In the absence of such notification, no tax was leviable and the levy on the assessee's turnover was set aside.

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Issues: (i) whether cotton belting manufactured by the assessee fell within the expression "cotton fabrics" in section 14(iia) of the Central Sales Tax Act, 1956 and was therefore declared goods; (ii) whether, in the absence of a notification under section 3-AA of the Uttar Pradesh Sales Tax Act, 1948 fixing the single point of sale and the rate of tax, tax could be levied on the turnover of such goods.

Issue (i): whether cotton belting manufactured by the assessee fell within the expression "cotton fabrics" in section 14(iia) of the Central Sales Tax Act, 1956 and was therefore declared goods.

Analysis: Section 14(iia) of the Central Sales Tax Act, 1956 treats "cotton fabrics" as declared goods and refers to item 19 of the First Schedule to the Central Excises and Salt Act, 1944, where cotton fabrics are defined as all varieties of fabrics manufactured wholly or partly from cotton. The description of the declared commodity is wide enough to include fabric made of cotton, and cotton belting was held on the facts to fall within that description. The State could not alter the character of declared goods by labelling the item as "beltings of all kinds" in a taxing notification.

Conclusion: cotton belting is cotton fabric and is declared goods under section 14(iia) of the Central Sales Tax Act, 1956.

Issue (ii): whether, in the absence of a notification under section 3-AA of the Uttar Pradesh Sales Tax Act, 1948 fixing the single point of sale and the rate of tax, tax could be levied on the turnover of such goods.

Analysis: Section 3-AA of the Uttar Pradesh Sales Tax Act, 1948 permits levy on declared goods only at a single point of sale notified by the State Government and at a rate not exceeding the ceiling in section 15 of the Central Sales Tax Act, 1956. Since no notification fixing the relevant point of sale and rate was shown to exist, the statutory conditions for levy were not satisfied. A tax on declared goods cannot be imposed unless the State complies with the notified point and rate requirements.

Conclusion: no tax was leviable in the absence of the requisite notification under section 3-AA of the Uttar Pradesh Sales Tax Act, 1948.

Final Conclusion: the revenue's appeal failed and the assessee's appeal succeeded, with the levy on the assessee's cotton belting turnover being set aside.

Ratio Decidendi: goods falling within the statutory description of declared goods cannot be subjected to a State levy unless the State has both fixed the notified point of sale and prescribed the rate within the limits of the Central Act.

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